Slovenian Financial Industry Woes Worsen on Rising Bad Loans

By Boris Cerni -
Dec 6, 2012

Slovenia’s financial industry woes
worsened in October as bad loans held by euro-region banks
continued to climb, the government economic institute said.

Bad loans at banks rose to 6.7 billion euros ($8.8
billion), or to 13.6 percent of all loans at the end of
September, the institute said. Lenders continue to set aside
reserves to cover non-performing loans with the amount in the
first 10 months of 2012 increasing by a fifth from a year
earlier, it said.

Slovenian banks like Nova Ljubljanska Banka d.d. and Nova
Kreditna Banka (KBMR) Maribor d.d. are seeing their bad loans surge as
the export-driven economy slides into its second recession in
three years. The three biggest banks in the Adriatic nation need
fresh funding to bolster their capital.

“Companies and non-financial institutions continued to
repay loans at domestic banks while credit given to households
remains at a very low level.” the Ljubljana-based institute
said in an e-mailed statement today.

NLB, which is set to report a loss for a fourth consecutive
year, according to Chief Executive Officer Janko Medja, wants to
raise 375 million euros by year’s end while Abanka Vipa d.d. is
seeking 90 million euros in a share sale.